The UK's largest car plant may not survive Brexit

The UK's largest car plant has so far survived the coronavirus pandemic and a major restructuring of its business. Despite this, it may not survive Brexit.

Nissan has warned that its huge Sunderland plant will not operate sustainably unless the UK strikes a new deal with the European Union that will keep car trade free of duty.

According to Nissan, the Sunderland plant employs around 6,000 people and its supply chain creates another 27,000 jobs. In 2018, the factory produced 442,000 cars a year. However, since the 2016 Brexit vote, her future has been the subject of intense speculation.

EU membership has allowed UK-produced vehicles to be exported across the bloc without having to pay customs duties, an advantage the UK will lose if it cannot strike a new trade deal with the European Union.

If no deal is reached, vehicles manufactured in Sunderland will be subject to 10% duty on sales in EU markets.

The threat of new trade barriers forced Nissan to act. Last year, he scrapped plans to build his new X-Trail SUV, saying Brexit uncertainty was partly to blame.

The UK left the European Union in January and the transition period to protect trade ends in December. Despite this, little progress has been made in talks on a new deal and the British government says it will not extend the negotiations.

The car industry has a lot to lose. Global carmakers who built factories in the UK are particularly vulnerable to any changes that disrupt their supply chains and just-in-time production, eroding profit margins at the worst possible time.

The industry had already suffered two years prior to the outbreak of the coronavirus pandemic, forcing factories and dealers around the world to shut down.

As the pandemic continues to take its toll around the world, Nissan has undertaken a major restructuring of its alliance with Renault (RNLSY) and Mitsubishi Motors.